The Agency WorldChapter 2

The Agency World

The traditional agency New agency structures The growing range of specialists Selecting an agency Paying the agency

The agency worldObjectives

Understand the role of advertising agencies and the relationship between agency and client

Appreciate the factors that promote creative and effective advertising

Introduction

No business needs an agencyCan buy different services

from separate specialistsMost businesses find it easier

to use an agency

Alternative ways to perform the advertising function

Necessitates employing an advertising staff and absorbing the operation costs

Unprofitable unless a company does a large and continuous advertising

In-house advertising operation

Full-service advertising agencyAdvantages

In-depth knowledge and skills Obtaining negotiating muscle with the media Coordinating advertising and marketing efforts

Disadvantages Some control is lost Larger clients are favored over small clients Occasionally inefficient in media buying

A la carte

Advantages Use services only when they are needed Availability of high-caliber creative talent Potential cost efficiencies

Disadvantages Specialists approach client problems in a

stereotyped fashion Lack of cost accountability Financial instability of smaller boutiques

Advertising Agency Organization

Develop advertising copy and campaigns

Copywriters, production people, and creative directors

Creative Services

Account Management

Media Services

Research Services

Advertising Agency Organization

Selecting the best advertising media

Media planners develop overall media strategy

Media buyers procure the selected media

Creative Services

Account Management

Media Services

Research Services

Advertising Agency Organization

Study clients’ customers’ buying habits, purchase preferences, and responsiveness

Focus groups, mall intercepts, acquisition of syndicated research data

Creative Services

Account Management

Media Services

Research Services

Advertising Agency Organization

Link the agency with the client

Act as liaisons so that the client does not need to interact directly with several different service departments and specialists

Creative Services

Account Management

Media Services

Research Services

Memorable Advertising

Apple Computer’s “1984” TV Commercial

What Makes Effective Advertising?

Sound

Strategy

Consumer’s

View Persuasive

Doesn’t

Overwhelm

Deliver on

Promises

Break

Clutter

Effective

Advertising

Creating Effective Advertising

The Role of Creativity

Being Creative

Characteristics of creative

campaigns

Differentiates itself

Out-if-the-ordinary

Energizer Batteries

Energizer Batteries

Energizer Batteries keep going, and going, and going…

Like the drum-beating bunny that reinforces the argument

Being Creative

Characteristics of creative

campaigns

Differentiates itself

Out-if-the-ordinary

Energizer

Batteries

Pepsi-Cola

Pepsi-ColaPepsi-Cola commercial

pokes fun at its competitor,

Coca-colaand subtly

conveys themessage that

perhapsPepsi is better

than Coke

Being Creative

Characteristics of creative

campaigns

Differentiates itself

Out-if-the-ordinary

Energizer

Batteries

Pepsi-Cola

Volkswagen

Golf

Being Creative

Characteristics of creative

campaigns

Differentiates itself

Out-if-the-ordinary

Energizer

Batteries

Pepsi-Cola

Volkswagen

Golf

Bud Light

Creating Effective Advertising

The Role of Creativity

Spuds MacKenzie campaign Budfrogs Louie and Frank Whassup?!

Little Caesar’s

The toga-clad “Pizza, Pizza” man captures and holds the

viewer’s attention and

provides Little Caesar’s with a unique image vis-a-vis its more laid-backcompetitors

Volkswagen Golf

This simple ad dramatizes that the Volkswagen

Golf is a roomy car while holding the viewer’s

attention in an entertaining manner

New agency structures

Three factors that influence the ways in which new agency formats have emerged

The new agency structures

Technological changes Growing importance of

internationally held accounts for large agencies

Recognition that different clients have diversified needs

Reorganizing the old

The ‘account room’ approach Structure the agency around its

clients - creates a focus for the account

team - keeps them close to the brand

Reorganizing the old

The “Virtual Account Group” or “Virtual agency”

Uses linked computers Intranet Video conferencing High tech connections

Reorganizing the old

“hot desking” First come first served offices

Results of reorganization

Gets agencies away from what they always criticized in their clients.

- focus on products and production with less regard to customers needs

- Allows for anyone on the team to be involved in the creative process.

Specialist Agencies

Media Buying agencies Creative boutiques Direct marketing Account planning Management consultants

Media Buying Agencies

Buy blocks of space or time from media business

Effectively became media wholesalers

An important source of advertising research

Creative Boutiques

Creative hot-shops Using briefs from clients – create

advertisements Often freelancers Assist full service agencies when

under pressure

Direct Marketing

Nowadays full service agencies are merging or aquiring direct specialists

Allows for common creative direction

Also developing new skills necessary for the internet advertising market

Account Planning

Take over the planning role for an agency

Act as supplementary source of ideas for agency or advertiser

Management consultants

Provide general consultancy on brand strategy

Selecting an agency Have they fully understood the brief? Do they know how to use market research? Can

they contribute to our thinking here? Is their strategic thinking sound? Is it imaginative? Have I learned anything useful

from it?

Are they professional and businesslike? Can I work with their senior people? And will

they be actually working on my business? Are their capabilities high in all key areas –

management, strategy, creative, media? Do they work well as a team – both among

themselves and with our people?

Selecting an agency

Is their creative work of a high quality?

Is this confined to TV, or does it go across all media?

Does this include below-the-line? New media? Can they offer an integrated service?

Do they have real expertise in the specialist areas which we are looking at, egl direct marketing, new media?

Can they work with us internationally (now or in the future)

How do they propose to evaluate the effectiveness of the campaign?

Selecting an agency What is their attitude to costs? Will they save us

money? How will they relate to our media buying

agency/other specialists? How important to them will our account be? Will

we be one of their larger accounts, or simply a small fish in a very large pool?

Will they fit with our ways of working? Are they willing and able to be business partners, or will they simply be suppliers? (This depends – of course – on how we see our own style of dealing with agencies)

Agency Compensation

• Commissions from media (15%)• Reduced commission system(<15%)

• Labor-based fee system

• Outcome-based

Three Sources